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Politically Connected Boards of Directors and The Allocation of Procurement Contracts

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  • Eitan Goldman
  • Jörg Rocholl
  • Jongil So

Abstract

This article analyzes whether political connections of the board of directors of publicly traded companies in the USA affect the allocation of government procurement contracts. It focuses on the change in control of both House and Senate following the 1994 election and finds that companies with boards connected to the winning (losing) party experience a significant and large increase (decrease) in procurement contracts after the election. The results remain significant after controlling for industry classifications as well as for several other company characteristics. The findings highlight one of the main avenues through which corporate political connections add value to US companies. Copyright 2013, Oxford University Press.

Suggested Citation

  • Eitan Goldman & Jörg Rocholl & Jongil So, 2013. "Politically Connected Boards of Directors and The Allocation of Procurement Contracts," Review of Finance, European Finance Association, vol. 17(5), pages 1617-1648.
  • Handle: RePEc:oup:revfin:v:17:y:2013:i:5:p:1617-1648
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    File URL: http://hdl.handle.net/10.1093/rof/rfs039
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